Social Networks: A New Resource for Investors

Social networks for investors are gaining popularity, but what are the core features? Our review and features matrix will help you find the best social investing app for your goals.

In retail investing, social is a hot new concept. There are dozens of startups seeking to build the Facebook of finance and striving to become household names. At the same time, Facebook and Twitter are inching towards the financial sphere, starting with peer-to-peer payments. If these networks decide to push past payments into social investing, the startups will have to beat them at their own game.

Who are social investing apps? There are countless names in the sphere that all share a few common features to harness the power of social networks for investors. These apps’ most popular features are crowdsourced stock ratings, trade-centric newsfeeds, portfolio sharing and billionaire mimicking.

The Wisdom of the Crowd

ClosingBell’s crowdsourced estimates page for $GPRO stock.

Networks like Estimize, ClosingBell, and Vetr provide stock ratings & predictions by drawing on the “wisdom of the crowd.” Using algorithms that take weighted averages, they consider analyst, trader, blogger, and individual investors’ expectations for a particular stock. These predictions are often more accurate than individual “experts” because of the wisdom of the crowd.

Feed-Centric

The largest social trading network is StockTwits, which has around 600,000 monthly average users. StockTwits’ interface looks just like Twitter, complete with a feed, ability to follow, and ability to search by stock ticker symbols.

Truly Social: Open Investing

If StockTwits and InvestFeed are inspired by Twitter, then Openfolio and Nvestly are inspired by Facebook, the preferred social network of over-sharers worldwide. These networks allow users to sync their portfolios and share their % allocations (never dollar amounts) with their network. This allows users to look at their existing network for trade ideas and strategies.

iBillionaire lets you see well-known billionaire portfolios and copy their strategies.

Learn from the best & brightest

One way to become a billionaire is by copying other billionaires. Apps that copy high net-worth investors like Warren Buffett and Carl Icahn have grown in popularity. Some of these include iBillionaire, MeetInvest, and Covestor. These apps have received a fair amount of criticism from skeptics, but they are helpful tools for new investors looking to develop a strategy.

Which of these apps will take off? It’s still too early to tell. As with other social networks, they will need to keep their users engaged with addicting features like the “like” button. As an extra challenge, Facebook and Twitter eyeing the sphere as a potential moneymaker. If these giants do try to enter social investing, the existing startups will have to beat them at their own game. Otherwise, social will go finance before finance goes social.

See our Social Investing feature matrix below to discover which might be right for you.